# Petition for a Writ of Certiorari — Charles L. Harney Construction Co. v. Fleming > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386416_2431%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for a Writ of Certiorari - **Published:** January 1, 1949 - **Citation:** 338 U.S. 893 ## Text iLE c FILHD OP ¥ OCT1 41949 ] CHARLES ELMORE CROPLEY SUPREME COURT OF THE UNIPEB—STZ CLERK OCTOBER TERM, 1949 No. 392 CHARLES L. HARNEY CONSTRUCTION COMPANY (Formerty Patm Sprines Hoipine Corporation), Petitioner, vs. MAJOR GENERAL PHILIP B. FLEMING, Inpivipva.tiy AND as ADMINISTRATOR, FEDERAL WorKs AGENCY, ET AL., Respondents PETITION FOR A WRIT OF CERTIORARI TO THE | UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA. \ j Haroitp LEvENTHAL, 4 Dav B. Gmeon, Joun J. Courtney, Counsel for Petitioner. — INDEX Page Subject Index Petition for Writ of Certiorari................ 1 sss Nakina h Sy Ace 1 eG ee ura k din Caen a walks 2 Questions presented ..................... 2 coco ix 6 da ued ah koh k bas x € 3 el i a eh aa ky wt 3 Specification of Errors to be Urged........ 7 Reasons for Granting the Writ............ 8 OG OY ih cian Side bb eater 6 0 0 19 Appendix—Statutes and eee In- Me Sa os kd Ou vita ack ke bis 20 Cases Cited Alien v. Sith, 173 U.S. 360... .. 2... 18 Bank of Alameda County v. McColgan, 69 Cal. mu Cont Gee, toe PF. (3) Sh... .. 5... 2k. 11 Big Sespe Oil Co. v. Cochran, 276 Fed. 216...... 12 Blair v. Commisstoner, 300 U. S.5............. 13 Boyle v. Lakeview Creamery Co., 9 Cal. (2d) 16, § Ae (EG OR 8: 6 ere 13 Bruun v. Cook, 280 Mich. 484, 273 N. W. 774. ... 12 Chicago Title € Trust Co. v. 4136 Wilcox Bldg. EE OSA ee ee CUR a ee os 9 Conn v. Manchester Amusement Co., 79 N. H. 450, ag a ee nay cae 5 12 Dos Pueblos Ranch and Imp. Co. v. Ellis, 8 Cal. ee &. SB eee a Pere 15 Erie Ry. Co. v. Tomkins, 304 U.S. 64.......... 10 Erwin v. United States, 97 U. S. 392........... 18 Estate of Trawng, 30 Cal. 2d 811, 185 P. (2d) EN ee eG ies icc i ced a vs» 15, 16 Fidelity Metals Corp. v. Rizley, 77 Cal. App. (2d) 289, 175 P. (2d) 592, 595 (1946)........ 12 Hawkins v. Glenn, 131 U.S. 319................ 11 Kay Furniture Co. v. Rovin, 312 Mich. 290, 20 EE ir Ch ye ita Ae Ps ow x 65s 12 —4709 INDEX Act of August 7, 1946, 60 Stat. 886, 50 U. 8.0. (appx.) sec. 1632(a) TU rcei gy Oe ra ae ee Mee Page Lesnow Brothers, Inc. v. United States, 78 F. I eA bianca beds 5 oo eee Levin v. Pittsburgh United Corp., 330 Pa. 457, Re as es Sea wanes 16 Loney v. Consolidated Water Co., 122 Cal. App. re Es ns hao eas her's 16 Lyman v. Smith, 137 Fla. 310, 188 So. 337... ... 12 Midwest Air Filters Pacific v. Finn, 201 Cal. 587, SS ts he I Ee ns aig Sy 15 Minnesota v. Keeley, 126 F. 2d 863 (C.C.A. I ett hn eae wk oe aa» 3 17 Mutual B. é L. Assn. v. Corwin, 220 Cal. 282, 30 i nab sok Lee ees oo) 15 Nardis Sportswear Co. v. Simmons, 218 8S. W. 3 gy + 8 ee meee 12 Oklahoma Gas Co. v. Oklahoma, 273 U. S. 257... 10 Stenton Electric Mfg. Co. v. Klaxon Co., 115 Py Res Se ee OE gi ee 18 Thomson v. United States, 321 U.S.19 ........ 17 Trubowitch v. Riverbank Canning Co., 30 Cal. +e Be 3 eB | . Re ere 12, 18 Willard v. Kimball, 277 Mass. 350, 178 N. E. Ce atk hI ee at dow ny 12 Wood Estate v. Chanslor, 209 Cal. 241, 286 Pac. ES eM PE aa ae oS st okee's was woke aeRO 15 W yoming-Indiana Oil € Gas Co. v. H. R. Weston, eee ee 12 Statutes and Regulations: Surplus Property Act of 1944, 58 Stat. 765, 50 U.S.C. ise ) 1601: Re i ea Rarer hh poh oe aN de eg hia a ERED FS ar yap acee mat Mesias Ne ine aan arn 20 he ee a er aie part ewe Dalat 3, 4, 7,8 EM fuck cpa Wiven inte excienehas , 20 So Rear mer te ye ot 21 EE at re Sag Onn en ora 2, 7, 8, 14, 21 _ INDEX War Assets Corp. Reg. March 6, 1946, sec. 8305.2 I War Assets Administration Regulation No. 5, Sec. 8305.20(b) (12 F.R. 2034).............. War Assets Administrator’s Regulation of June 29, 1946, Vol. 11, F.R., pp. 7611, 7612......... California Civil Code, Sec. 362................ Miscellaneous: Ballantine, California Corporation Laws (1932 wu), O00. OP4, we. 478-474. .... .. 2... ok... Comment, 44 Michigan Law Review 823 (1946) . Congressional Record, Vol. 90: I cr 8 a eS Corpus Juris Secundum Corporations: Re I I re wae ee H. R. Rep. No. 2337, 79th Cong., 2d Sess......... Hearings before the Subcommittee of the House 21 4,12 17 = SUPREME COURT OF THE UNITED STATES OCTOBER TERM, 1949 No. 392 CHARLES L. HARNEY CONSTRUCTION COMPANY (FormerLy Paum Sprincs Hoipine Corporation), Petitioner, vs. MAJOR GENERAL PHILIP B. FLEMING, Inpivinva..y AND AS ADMINISTRAZOR, FreperaL Works AGENCY, ET AL., meas Respondents PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT. Petitioner, Charles L. Harney Corstruction Company (formerly Palm Springs Holding Corporation), prays that a writ of certiorari issue to review the judgment of the United States Court of Appeals for the District of Colum- bia Circuit in the above-entitled cause. Opinions Below The opinion of the Court of Appeals (R. 49) is reported in — F. (2d) —, The District Court gave summary judg- 2 ment in favor of petitioner without rendering an opinion (R. 47). Jurisdiction The judgment of the Court of Appeals for the District of Columbia Circuit was entered on July 18, 1949 (R. 57). The jurisdiction of this Court is invoked under Section 240 of the Judicial Code, as amended by the Act of February 13, 1925. Questions Presented The principal questions presented by this case are: 1. Whether petitioner, a California corporation whose hotel taken by the Government in 1942, is precluded by its voiuntary dissolution from exercising the right of a former owner, under Section 23 (d) of the Surplus Property Act, to repurchase real property at the price paid by the Gov- ernment though below current value notwithstanding the provisions of Section 399 of the California Civil Code that a dissolved corporation shall continue in existence in- definitely for the purpose of realizing upon assets in its winding-up, and notwithstanding the rulings of the Super- ior Court of California that under Section 399 petitioner is in existence and has capacity under state law, and directing petitioner, to realize the value of its former owner right whether based solely upon the Surplus Property Act, as passed in 1944, or in the alternative upon the Act as amended in 1946. 2. Whether the court below gave due effect to the Cali- fornia law and decrees of the Superior Court of California in ruling that petitioner was not the person from whom the hotel was acquired by the Government, because of changes in its business and stockholders, and that its dissolution rendered it incapable of exercising the former owner’s right under Section 23 (d) of the Surplus Property Act. A subsidiary question is: 3. Whether Section 23 of the Surplus Property Act of 1944 applied to hotels prior to its amendment in 1946. Statute Involved The relevant statutory provisions are set forth in the Appendix. Statement Prior to June 22, 1942, the El Mirador Hotel was owned by petitioner then named the Palm Springs Holding Corpo- ration, a California corporation. On June 22, 1942, the Government took the hotel from petitioner in condemna- tion proceedings, and paid $425,000. Thereafter, there were transfers of the stock in petitioner corporation to the two principal stockholders, Warren B. Pinney and Ralph D. Lacoe, Jr. On October 1, 1942, they transferred the stock to Charles L. Harney, P. E. Harney, Henry F. Wrigley and C. J. Carroll. Thereafter, proceed- ing under California law, petitioner corporation amended its charter so as to change its name to Charles L. Harney Construction Company, its principal office from Los Ange- les to San Francisco, and its business to a general con- tracting business. In 1945 petitioner corporation, having filed a certificate of election to dissolve, was dissolved pur- suant to a certificate of dissolution dated June 28, 1945, and filed with the Secretary of State on August 4, 1945 (R. 27-29). The hotel was acquired under the Declaration of Taking for permanent use as an Army hospital (later named the Torney General Hospital). But upon learning in January, 1946, that the Torney General Hospital was surplus to the needs of the Government, petitioner corporation notified the War Assets Administration that as former owner of the 4 hotel it intended to exercise its statutory right of repur- chase. Section 23 of the Surplus Property Act of 1944, 58 Stat. 765, provides that the former owner of surplus real property shall have a preferential right to repurchase the property at the price paid him by the Government, subject to adjustments for increase or decrease in value resulting from action by the Government. By letter dated January 27, 1947, the War Assets Administration notified petitioner that since it had been dissolved it was no longer in existence and was therefore unable to exercise its repurchase priority (R. 7). Petitioner, by letter dated March 13, 1947, called atten- tion to the fact that under Sec. 399 of the California Civil Code, dissolution does not terminate the existence of a cor- poration. Section 399 provides that assets omitted from the winding ‘‘shall continue in the dissolved corporation.” (R. 7.) By letter dated April 1, 1947, the War Assets Administra- tion stated the opinion that the statutory repurchase right was not an ‘‘asset’’ within meaning of Sec. 399, but further stated that additional consideration would be given to peti- tioner’s priority right upon submission of ‘‘satisfactory evidence’’ that under California law, a dissolved corpora- tion might acquire real property under the circumstances of this case. (R. 8.) Petitioner filed a petition in the Superior Court of the State of California, pursuant to Sec. 403 of the California Civil Code. In California corporations in winding up are under the surveillance of, and subject to the jurisdiction of, the Superior Court. Section 403 provides for petitions by the corporation and gives the Superior Court jurisdic- tion to order and adjudge as to the assets available for distribution in the case of a corporation previously dis- solved. The petition recited the facts in the case and 5 prayed for an order authorizing petitioner to submit a repurchase claim as former owner of the property. (R. 8, 15-18.) On June 3, 1947, the Superior Court granted the peti- tion, and entered an order that petitioner is in continued existence, that the repurchase right as the former owner ‘‘eonstitutes an asset of the said corporation within the meaning of Sec. 399 of the California Civil Code,’’ and that the corporation is authorized and directed to submit its claim as former owner and to offer the adjusted purchase price prescribed for the former owner, it being understood that such price is less than present market value. (R. 8, 18-20.) Petitioner submitted this order, together with the like opinion of the Secretary of State of the State of California, as evidence of its authority to acquire the hotel property under California law. These were presented to the Federal Works Agency, which had been designated by the War Assets Administration as its disposal agent for disposition of this property. They were submitted together with a tender of $700,000, the sum set by the W. A. A. as the adjusted price to be paid by the former owner. (R. 4, 8.) By letter dated August 20, 1947, the Acting Administrator of the Federal Works Agency advised petitioner that ‘‘as a matter of law’’ it was not eligible to exercise the repur- chase priority of a former owner. That ruling was based upon two propositions: (1) Former owners of commercial properties such as hotels had no rights under the original Surplus Property Act, passed October 3, 1944—i. e., prior to the amendatory Act of August 7, 1946—because section 23(a) of the Act as originally passed defined ‘‘real prop- erty’’ to exclude ‘‘industrial plants, factories, or similar structures, and facilities.’’ (2) Accordingly, there was no ‘asset’? in existence at the time of petitioner’s dissolu- 6 tion in August, 1945, and Section 399 of the California Civil Code is inapplicable. (R. 35-43.) Petitioner filed a supplementary petition with the Cal- ifornia Superior Court, advising the court of the F. W. A.’s August 20, 1947, ruling (R. 20-24.) The court entered a supplementary order authorizing petitioner to proceed to realize upon this asset, and stated that Section 399 of the California Civil Code was applicable whether petitioner’s repurchase right as former owner ‘‘is based solely upon the Surplus Property Act of 1944 . . . or upon that Act as amended by the Act of August 7, 1946.’’ (R. 24-25.) Petitioner immediately advised respondents of this sup- plementary order and requested reconsideration of the ad- ministrative ruling. (R. 9.) By letter of February 2, 1948, respondent Fleming, advised of his adherence to the August 20, 1947, ruling. He stated that he had considered and re- jected petitioner’s suggestion that the California proceed- ing be reopened for participation by the Federal Works Agency. (R. 43-44.) An agreement has been executed between Pinney, Lacoe and the other persons holding stock in petitioner corpora- tion as of June 22, 1942 (the Pinney-Lacoe group, and the stockholders who acquired the stock on October 2, 1942 (the Harney group), agreeing that both groups of stock- holders would share in the benefits derived from the exercise by petitioner corporation of its rights as former owner. Notification of this agreement was sent to respondents on July 28, 1947, prior to the ruling of August 20, 1947. (R. 44-45.) On February 9, 1948, petitioner brought this action for declaratory judgment (R. 1) on two grounds: first, that the Surplus Property Act, as passed on October 3, 1944, did extend to the former owners of hotels; and second, that whether petitioner’s right was based solely on the 1944 law, — 7 or was based on the 1944 law as amended in 1946, peti- tioner was authorized by California law to realize on this asset. In granting petitioner’s motion for summary judg- ment the District Court agreed with both contentions and issved the declaration which was prayed in the complaint (R. 11) declaring that petitioner is— * * * jin possession of and eligible to exercise the right of a former owner, as provided by Section 23 of the Surplus Property Act of 1944, both as originally enacted and as amended * * *%. (R. 47-48.) The Circuit Court of Appeals reversed on the ground that the California law and the California court decrees as to the existence and capacity of petitioner corporation are not controlling; that section 23(d) of the Surplus Property Act can not be invoked by dissolved corporations; that petitioner is not the person from whom the hotel was ac- quired by the Government; that section 23 of the Surplus Property Act did not extend to commercial property such as hotels prior to its amendment in 1946, which was subse- quent to petitioner’s dissolution under State law, and that petitioner is not now in existence and thus has no capacity to exercise the right to repurchase as an asset. (R. 49.) Specification of Errors to Be Urged The Cireuit Court of Appeals for the District of Colum- bia Circuit erred: 1. In holding that Section 23(d) of the Surplus Property Act, as passed in 1944 and as amended in 1945, can not be invoked by a dissolved corporation. 2. In failing to give due effect to the Califomia law, and the decrees of the California Superior Court, with respect to the existence and legal capacities of petitioner corpora- tion under section 399 of the California Civi Code. 8 3. In failing to apply the law of California (a) as to the effect of petitioner’s change in name, business and share- holders, under which law petitioner’s corporate identity has never been changed, and (b) as to the effect of petitioner's dissolution, under which law petitioner corporation has remained in existence, and has capacity to repurchase its hotel under section 23(d) of the Surplus Property Act. 4. In ruling that petitioner is not the person from whom the hotel was acquired by the Government. 5. In ruling that petitioner is not a corporation in being at the present time and is thus not capable of repurchasing the hotel property formerly owned by petitioner. 6. In ruling that the section 23 of the Surplus Property Act of 1944 did not apply to hotels as the Act was passed in 1944, and was not applicable to hotels prior to the 1946 amendment. 7. In failing to rule that the right to repurchase the hotel formerly owned by petitioner is an asset which petitioner can realize on, under California law and under the Surplus Property Act, both (a) upon the premise, which is correct, that the right applied to hotels under the Surplus Property Act as passed in 1944, and (b) even upon the alternative premise that the right as to hotels is based upon the act as amended in 1946. 8. In reversing the judgment of the District Court with instructions to dismiss the complaint. Reasons for Granting the Writ The central question in this case is the weight and effect to be accorded by a Federal court, in determining the ability of a dissolved corporation to invoke a Federal statute, to the State law and State court rulings on the capacity of a dissolved corporation of that State. — —— 9 The sound doctrine is that whether voluntary dissolution of a corporation defeats its eligibility to invoke a Federal statute depends upon the effect of the dissolution under the corporation statutes of the State involved. Chicago T. & T. Co. v. 4136 Wilcox Bldg. Corp., 302 U. S. 120. If the State involved has, like most of the States, passed a ‘‘continued existence’’ statute which beneficiently continues the existence and relevant capacities of the dissolved corpo- ration, Congress will not be deemed to have jettisoned the state continued existence statutes. The Federal statute may be invoked by the dissolved corporation continued in existence by the laws of the State of incorporation. Lesnow Bros. Inc. v. United States, 78 F. Supp. 829 (C. Cl.). The court below decided that petitioner corporation, dis- solved in California, could not exercise the right, provided by section 23(d) of the Surplus Property Act of 1944, of a natural or corporate person to repurchase surplus real property, acquired from such person by the Government during wartime, at the price originally paid by the Govern- ment, plus increases for improvements made by the Govern- ment. The court below stated that the decision of the California court is not ‘‘in any way controlling’’ as to the application of a Federal statute. But the court did not appreciate the importance of appraising dissolved corporations, wherever encountered in the geography of the Federal system, ac- cording to the laws of the State of incorporation. For whether ‘‘dissolution’’ of a corporation is to be held to de- feat its eligibility under Federal law must depend upon the meaning and effect of that dissolution under the State law. The decision below conflicts in principle with Chicago T. & T. Co. v. 4136 Wilcox Bldg. Corp., and Lesnow Bros., Inc. v. United States, supra. In view of the importance in our Federal system of maintaining a proper balance between the 10 spheres of Federal law and State law, of according due effect and credit to State law and State court decrees, whether in deciding statutory or non-statutory questions of law, the decision below should be reviewed by this Court. The court below in essence approached this case from the premise of the statement in Oklahoma Gas Co. v. Oklahoma, 273: U. S. 257, 259: **It is well settled that at common law and in the federal jurisdiction a corporation which has been dis- solved is as if it did not exist, and the result of the dissolu- tion can not be distinguished from the death of a natural person in its effect.’’ But the holding of the Oklahoma Gas case recognized, even prior to Erie Ry. Co. v. Tompkins, 304 U. S. 64, the importance of giving full scope in the Federal courts to a state statute providing for the extended life and powers of a dissolved corporation, since that ‘‘concerns the funda- mental law of the corporation enacted by the State which brought the corporation into being.’’ Oklahoma Gas Co. v. Oklahoma, 273 U. S. 257, 260. A corporation dissolving in California does so with full confidence that it can in no way be jeopardized in respect to realizing on its assets. The relevant California legislation (California Civil Code section 399) provides that a corpo- ration which has voluntarily obtained dissolution by court order, nevertheless continues to exist for the purpose, inter alia, of realizing upon assets. California’s is one of the many continued existence stat- utes by which most if not all of the states have abandoned the old common law rule that dissolution of a corporation means its extinction and, frequently, its inability to realize upon assets ascertained after dissolution. Some states mitigate these harsh consequences, and extend corporate — 11 life, for only a certain period of years, two, three or five. ‘‘Many states, including California, New York and Ohio have statutes directing that a dissolved corporation shall continue as an entity without time limit.’’ Hornstein, Voluntary Dissolution 51 Yale L. J. 64, 71. California, in abandoning the common law rule in 1929, deliberately pro- vided ‘‘for the continuation of corporate existence indefi- nitely’’ rather than a definite period, in order to minimize the harsh consequences of dissolution under the common law rule. See Ballantine, California Corporation Laws (1932 ed.) sec. 394, pp. 473-4. Assets not included in the winding up may be realized upon at any future time. Bank of Alameda County v. McColgan, 69 Cal. App. (2d) 464, 159 P. (2d) 31. These continued existence state statutes are remedial and are given a liberal construction, Hawkins v. Glenn, 131 U. S. 319, 33. They have been consistently construed to mean that a corporation though already dissolved may ac- quire property where that is the way to realize upon an asset consisting of the right to purchase property at an advantageous price. The prohibition in these statutes against continuance in business is deemed not to prohibit such acquisitions and appurtenant obligations as are inci- dent to realization upon assets, even though the premises cannot be used in carrying on the business. See Comment, 44 Michigan Law Review 823 (1946). Thus the courts have held that a corporation, though previously dissolved, may under such continued existence statutes (1) repurchase lands by exercising a right of re- demption from a judgment sale (purchasing at a price below current value); (2) exercise an option to purchase land under a lease provision (at an option price below current value) ; (3) exercise an option to extend the terms of a lease (in order to sublease at a higher rental) ; and (4) continue 12 in a joint prospecting venture operating by applying to the state government for favorable mineral leases (which are usually though not necessarily granted to those holding existing leases).' : California follows this liberal, remedial doctrine that dissolved corporations may realize upon their assets through the making of purchases. See Trubowitch v. River- bank Canning Co., 30 Cal. (2d) 335, 182 P. (2d) 182 (1947). Accordingly, in 1947 the California Superior Court issued two decrees holding that petitioner corporation, being a California dissolved corporation, had the authority, in so far as the California law is concerned, to realize upon a former owner right as an asset—assuming that it was an asset in fact, 7. e. that the former owner’s option was to repurchase for less than current market value (See R. 18, R. 24). These decrees were issued upon a petition filed by the corporation under section 403 of the California Civil Code— comparable to a trustee’s request for instructions.” The rulings were sought by petitioner pursuant to advice of the War Assets Administration that satisfactory evidence was required as to the authority of a dissolved corporation under state law to exercise its repurchase right (R. 7-8, 1 The applicable citations are: (1) Big Sespe Oil Co. v. Cochran, 276 Fed. 216 (C.C.A. 9) (1921); (interpreting the California law); Lyman v. Smith, 137 Fila. 310, 188 So. 337 (1939); Bruun v. Cook, 280 Mich. 484, 273 N. W. 774 (1937) ; Willard v. Kimball, 277 Mass. 350, 178 N. E. 607 (1931). (2) Conn v. Manchester Amusement Co., 79 N. H. 450, 111 Atl. 339 (1920); Nardis Sportswear Co. v. Simmons, 218 S. W. (2d) 451 (Tex. Sup. Ct. 1949). (3) Kay Furniture Co. v. Rovin, 312 Mich., 290, 20 N. W. 2d 194 (1945). (4) Wyoming-Indiana Oil ¢ Gas Co. v. H. R. Weston, 43 Wyo. 526, 7 Pac. 2d 206 (1932). 2 A California corporation in the process of dissolution is considered in the position of a trustee. Cf. Big Sespe Oil Co. v. Cochran, 276 Fed. 216, 223 (C.C.A. 9th). 13 par. (d) ff). Respondent officials could not be required to appear in the State court and they ignored petitioner’s sug- gestion that all parties appear before the State court (R. 43, Exh. I, 2d par.). The Superior Court’s judgments are properly given effect as a determination of the effect of Section 399 even though respondents were not parties. Blair v. Commissioner, 300 U. 8.5, 10. Moreover, as already noted, the decrees of the Superior Court are clearly correct under California’s continued existence statute, Civil Code, Section 399.* So far as California law is concerned, it is plain that peti- tioner has the capacity to exercise the repurchase rights under Section 23. It is likewise plain under the Federal statute that a former owner need not be a ‘‘ going concern”’ provided it has the capacity to purchase the asset. The former owner is the only priority claimant under Section 23 who is not required to keep the property and who may sell the same immediately without restrictions.‘ In passing 3 The court below, while rejecting petitioner’s contention as to the effect to be given to California law, cited, as adding “further strength ae to our view” (R. 56), the cases of Boyle v. Lakeview Creamery Co., 9 Cal. (2d) 16, 68 P. (2d) 968, 970 (1937) ; Fidelity Metals Corp. v. Rizley, 77 Cal. App. (2d) 289, 175 P. (2d) 592, 595 (1946). Those cases involved special statutes, of California and Nevada, of forfeiture of charter for failure to pay taxes, and in both cases the court stated that wider powers would be available to a dissolved corporation invoking the general pro- visions of Sec. 399 of the California Civil Code. * See. 8305.20(b), War Assets Administration Regulation 5, 12 Fed. Reg. 2034: “Conditions in disposal instrument. Unless otherwise author- ized by the Administration, as a part of each disposal pursuant to this part, any priority claimant, . . . shall certify in writing that he is acquiring the property for the uses and purposes set forth in his proposal and (1) if a purchaser, that he is not acquiring it for the purpose of re- selling it and in no case will he resell it within three (3) years without first obtaining the written authorization of the Administration; * * * Pro- vided, however, that no restriction as to resale’shall be imposed upon a conveyance to a former owner, or the tenant of a former owner, acquiring surplus section 23 real property through an exercise of his priority.” (Emphasis added.) 14 Section 23 (d), Congress rejected the Government’s view that a former owner had already been treated with com. plete justice by receiving the value at the time of acquisi- tion. The legislators insisted that, as a matter of fairness, where the Government in war-time seized the fee, rather than a leasehold, and now proposed to sell the real property, any increase in the value of the property should inure not to the advantage of the strong-armed Government but rather to the benefit of the former owner.® A dissolved corporation can realize on that value though no longer continuing in business. Congress avoided any rule which would limit the applica- tion of the statute to large corporations—like the Chesa- peake and Ohio Railway Corp. which of course continued in business and reacquired its Greenbrier Hotel—and would discriminate against a small single-asset corporation which would naturally tend, after condemnation of its sole asset, either to enter a new enterprise or dissolve. The statutory right is in no way linked to a former owner proposing to reestablish his business. A former owner is definitely given the option to repurchase even though the land is no longer suitable for the same purpose as when acquired by the Gov- ernment. See. 23(d) (1) (B). Indeed, Congress spe- cifically passed the former owner provision so that it would apply to ‘‘Moore Field.’’ In that case after agricultural land was converted by the Navy into an air field, oil was discovered nearby. Congress assured repurchase by the former owners, though the land was no longer suitable for farming due to the gravel runways. 5 “Surplus Property Act of 1944” Hearings before the House Committee on Expenditures in the Executive Departments, 78th Cong., 2d Sess., on H.R. 5125 (Aug. 7, 8, 9, 1944). (See particularly statements of Con- gressmen Gossett and Wolverton, pp. 54-55). ® See 90 Cong. Rec. 7267-7628; 90 Cong. Rec. 7935. , wi 15 The court below likewise totally ignores and disregards the State law when it states that petitioner is not ‘‘and never was’’ the person from whom the hotel was acquired by the Government (R. 6). This case does not involve any ‘‘successor’’ corporation. Petitioner is, on the contrary, the very corporation whose hotel was taken in condemna- tion proceedings, notwithstanding the changes in name, business and shareholders. California applies the general doctrine of corporate entity, that a corporation is con- sidered a separate entity from its stockholders (remaining unchanged in its identity by changes in its stockholders). Estate of Traung, 30 Cal. (2d) 801. California recognizes the doctrine of separate corporate entity save in excep- tional circumstances, not present here, where that would promote a wrong, accomplish an illegal act or perpetrate a fraud. Wood Estate v. Chanslor, 209 Cal. 241, 286 Pac. 1001; Midwest Air Filters Pacific v. Finn, 201 Cal. 587, 258 Pac. 382; Dos Pueblos Ranch and Impl. Co. v. Ellis, 8 Cal. 2d 617, 67 P. (2d) 340. In fact recovery by petitioner corpo- ration will inure to the advantage of both the former and the present shareholders, pursuant to their agreement (R. 44). But quite apart from that agreement petitioner’s identity and status under California law was in no way affected by the transfer of its stock. California likewise follows the general doctrines of cor- poration law, which provide that a corporation’s identity is not affected by charter amendments effecting a change of name or place of business (Mutual B. & L. Assn. v. Corwin, 220 Cal. 282, 30 P. (2d) 509, 514; Calif. Civil Code See. 362; Corpus Juris Secundum, Vol. 17, Sec. 171; Vol. 18, Sec. 177), or by the fact that it sells its assets, and after withdrawal of all stockholders who so desire, amends its charter, changes its name and proceeds into new enterprises. Estate of 16 Traung, 30 Cal. (2d) 811, 814, 185 P. (2d) 801; Loney vy. Consolidated Water Co., 122 Cal. App. 350, 9 P. (2d) 888; 19 Corpus Juris Secundum, Sec. 1668; Levin v. Pittsburgh United Corp., 330 Pa. 457, 199 Atl. 332. The court below erred in purporting to find a change of identity of this California entity without consideration of, and in contravention of, the California corporation law, and also, indeed, of generally prevailing doctrines of corpo- ration law. There is a subsidiary issue in this case, whether the right of a former owner under Sec. 23 (d) extends to real prop- erty such as hotels, under the act as passed in 1944, as decided by the District Judge (R. 47), or solely under the act as amended in 1946, as held by the court below. Petitioner submits that Section 23 as passed in 1944 extended to hotels. The administrative agency ruled in March, 1946, that ‘‘real property’’ as defined in Section 23 (a) of the 1944 act excluded all commercial properties. That ruling reversed the previous assumption of the ad- ministrative officials.’ The administrative regulation that all commercial property was excluded from Section 23 made nonsense out of Section 23(f) of the 1944 Act providing a veterans preference for ‘‘real property . . . suitable for . . . small business purposes.’’ Section 23 (a) was defined by Congress to exclude industrial plants and ‘‘simi- lar structures’’ to take care of the administrative objections that no former owner priority is practicable in the case of large installations which have been built up by the Govern- ment—particularly since such installations, which must 7 The files of the disposal agencies show examples of administrative actions based upon an assumption that Sec. 23(a) applied to commercial properties—Wilmington Commissary Bldg. (Calif.); Chilkoot Barracks (Alaska) ; Gold Hill Arsenic Project (Utah). 17 obviously be sold as a single economic unit, were often de- rived from lands taken from many different owners.® But the 1944 Act’s definition of ‘‘real property’’ plainly embraced commercial properties, such as hotels, being sold in substantially the same parcels and substantially the same structures as when taken. The 1946 amendment making that plain was passed by Congress just as soon as it learned of the 1946 administrative interpretation.® Both the House and Senate Committees expressly called it ‘‘clarifying legislation’. H. R. Rep. No. 2337, p. 2; S. Rep. No. 1722, p. 1, 79th Cong. 2d Sess. The administrative interpretation was termed ‘‘wholly unjustified.’’ H. R. Rep. No. 2337, p. 2. A clarifying amendment redefining a term evidences no change in legislative intent. Thomson v. United States, 321 U. S. 19, 23; Minnesota v. Keeley, 126 F. (2d) 863, 866 (C. C. A. 8th). But in any event the California Superior Court correctly held Sec. 399 of the California Civil Code to provide capacity in petitioner to realize on this asset whether based solely on the 1944 Act or upon that act as amended in 1946 (R. 24-5). Under sec. 399 the claim may mature after dis- solution of the corporation; the=@ekterne—cheselsed=see- paseteens, the California dissolved corporation may realize 8 See “Disposition of Surplus Real Property”, Hearings before the Sub- committee of the House Committee on Public Buildings and Grounds, 78th Cong., 2d Sess., on H. R. 3140, 2377, 2958, 2971, 2112 and 2487 (Nov. 1943 et seq.)—particularly statements of Secretary Stimson, pp. 3, 15, 24; Justice Dept. (p. 120); Navy Dept. p. 314 and statement of Chairman Manaseo, p. 35; National Housing Agency, p. 35. See also “Surplus Property Act of 1944,” Hearings before the House Committee on Expen- ditures in the Executive Departments, 78th Cong., 2d Sess. on H.R. 5125 (Aug. 1944), at pp. 48-49. *The War Assets Corporation issued its regulation March 5, 1946, Three bills were introduced in Congress in June 1946; the House Com- mittee reported favorably on June 25 within a fortnight, after a Senate Report, and a Conference, Congress passed the Act of August 7, 1946. 18 upon the asset when it matures. See Trubowitch v. River- bank Canning Co., 30 Cal. (2d) 335, 182 P. (2d) 152, and its approval of Stentor Elec. Mfg. Co. v. Klaxon Co., 115 F, (2d) 268 (C. C. A. 3d), permitting suit upon a claim which matured subsequent to plaintiff’s dissolution. As of the date of its dissolution in 1945, petitioner corporation had a claim based upon the 1944 law, a claim upon the Govern- ment officials to include commercial properties within see- tion 23(a) in accordance with their practice prior to the March 1946 ruling, and a substantial expectancy that the legislature would intercede to protect the claim if necessary, as it did. Claims are ‘‘property, though of uncertain value .. . although the validity of such claims may be denied, and their value may depend upon the uncertainties of litigation, or the doubtful result of an appeal to the legislature.’’ Erwin v. United States, 97 U. S. 392, 395. This Court has specifi- cally stated the ‘‘inchoate right’’ of a sugar producer to receive a bounty under proposed legislation pending in Congress to be an existing ‘‘asset.’’ Allen v. Smith, 173 U.S. 389. The California Superior Court correctly applied See. 399 of the California Civil Code, and held that petitioner has capacity, so far as California law is concerned, to realize upon a former owner asset as based upon the 1944 act alone, and in the alternative as based upon that act as amended in 1946. The District Court, in considering the applicability of this Federal statute to dissolved corporations, correctly followed the California law and decrees and gave judgment, also on alternative grounds, in favor of petitioner. The court below, disregarding the California law and decrees, reversed the judgment of the District Court. Its ruling is 19 erroneous, and conflicts in principle with decisions of this Court and the Court of Claims. The question presented, involving the effect to be given by Federal courts under Federal statutes to State law and decrees, is one of impor- tance under our Federal system. Conclusion For the reasons stated, this petition for a writ of certio- rari should be granted. Respectfully submitted, Haro_tp LEVENTHAL, Washington, D.C. Davin B. Gipeon, San Francisco, California. Joun J. Courtney, Washington, D. C. October, 1949. 20 APPENDIX Statutes and Regulations Involved Section 399 of the California Civil Code reads as follows: 399. Continuation of corporation after dissolution. A corporation which is dissolved by the expiration of its terms of existence, by forfeiture of existence by order of court, or otherwise, nevertheless shall con- tinue to exist for the purpose of winding up its affairs, prosecuting and defending actions by or against it, and enabling it to collect and discharge obligations, dispose of and convey its property, and collect and divide its assets, but not for the purpose of continuing business except in so far as necessary for the winding up thereof. No action or proceeding to which a cor- poration is a party shall abate by the dissolution of such corporation or by reason of proceedings for dis- solution and winding up thereof. Any assets inadvertently or otherwise omitted from the winding up shall continue in the dissolved corpora- tion for the benefit of the persons entitled thereto upon dissolution of the corporation, and on realization shall be distributed accordingly. The relevant provisions of the Surplus Property Act of 1944, 58 Stat. 765, 50 U. S. C. War App. sec. 1611 et seq. are as follows: Sec. 3. As used in this Act— (h) The term ‘‘person’’ means any individual, cor- poration, partnership, firm, association, trust, estate, or other entity. Sec. 23(a). As used in this section— (1) The term ‘‘real property’? means property con- sisting of land, together with any fixtures and in- provements thereon, located outside of the District of Columbia, but does not include war housing, industrial 21 plants, factories, or similar structures and facilities, or the sites thereof, or land which the Board deter- mines is essential to the use of any of the foregoing; and (2) The term ‘‘surplus real property’? means real property which has been determined under section 11 to be surplus property. (d)(1)(A) In the case of any surplus real property which was acquired by any Government agency after December 31, 1939, the person from whom such prop- erty was acquired shall be given notice, in such man- ner (which may include publication) as the Board by regulation may prescribe, that the property is to be disposed of by the United States and shall be en- titled to purchase such property, in substantially the identical tract as when acquired from such person, at private sale at any time during the period of ninety days following such notice * * *%, (3) The price to be paid for surplus real property sold under this subsection shall be a price not greater than that for which it was acquired by the United States, such acquisition price being properly adjusted to reflect any increase or decrease in the value of such property resulting from action by the United States, or a price equal to the market price at the time of sale of such property, whichever price is the lower. War Assets Corporation Regulation of March 6, 1946, Vol. 11, F. R., p. 2644, and War Assets Administrator’s Regulation of June 29, 1946, Vol. 11, F. R., pp. 7611, 7612, provided as follows: 8305.2(11). ‘‘Section 23 real property’? means prop- erty consisting of land, together with any fixtures and improvements thereon, located outside of the District of Columbia, but does not include war housing, in- dustrial plants, factories, or similar structures and 22 facilities, or the sites thereof, or land which the Ad ministrator determines is essential to the use of any of © the foregoing. ‘‘Similar structures and facilities’’ ag” used above shall include structures and facilities classi fied by the Administrator as (1) commercial * * *% Section 1 of the Act of August 7, 1946, 60 Stat. 886, 50. U.S. C. War App., sec. 1632, provides: That section 23(a)(1) of the Surplus Property Aet | of 1944 is amended to read as follows: ‘*(1) The term ‘‘real property’’ means property con- sisting of land, together with any fixtures and im- provements thereon (including hotels, apartment houses, hospitals, office buildings, stores, and other commercial structures) located outside the District of Columbia, but does not include (A) commercial strue- | tures constructed by, at the direction of, or on behalf of any Government agency, (B) commercial structures — which the Administrator determines have been made an | integral part of a functional or economic unit which should be disposed of as a whole, and (C) war housing — industrial plants, factories, airports, airport facilities, or similar structures and facilities, or the sites thereof, or land which the Administrator determines essential — to the use of any of the foregoing; * * *.’’ 4 (4709) --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386416_2431%3A1. Public record. Not legal advice.